Indian Markets Outlook for the week – 07 to 11.Jul.2014
Next week promises to be an action-packed one for local equities, with the new government
facing its first litmus test--the Union Budget for 2014-15 (Apr-Mar)--that will be presented
by Finance Minister Arun Jaitley on Thursday. Railway-related shares will be closely watched
as well, as the government will present the Railway Budget on Tuesday. Talk of a cut in
import duty on gold to 6% from 10% currently in the Budget is likely to push jewellery
stocks higher, while public sector banks may rise on hope government will announce capital
infusion.
The week will also see the earnings season kicking off, with information technology major
Infosys reporting results for Apr-Jun on Jul 11. On the same day, the Central Statistics Office
will release Index of Industrial Production data for May. Expectations from the budget are
high, with reforms being expected on almost every front, be it easing of foreign investment
norms in textiles, capital infusion in public sector banks, divestment in public sector entities,
reduction in fuel subsidies, or gold import duty cut.
Overall, the new government faces a tough task between going all-out on reforms front and
managing the tricky trio of inflation, fiscal deficit and economic growth. Indices have risen
over 8% since May 16, when the Bharatiya Janata Party-led National Democratic Alliance
government won the general elections with a strong majority. We expect the National Stock
Exchange's Nifty to test the 8000-mark in the run up to the Budget.
Any major negative surprise that dents the Street's Budget wish-list may see indices
witnessing some downward correction. However, they do not see a steep fall or expect the
indices to top out after the Budget. With the amount of money flowing in, we do not expect
the market run to
halt anytime soon. A slight correction is possible somewhat if some negative surprises are
announced, but the long-term trend remains intact.
Foreign portfolio investors have pumped in $10.3 bln in Indian equities so far this year.
Yesterday, the Nifty ended at a record high of 7751.60, up 36.80 points or 0.5% from close
Thursday. Intraday, it touched a lifetime high of 7758.00 and a low of 7661.30. The S&P
BSE Sensex came close to touching a lifetime high, but failed to do so. It had touched a
lifetime high of 25999.08 in the previous session. After moving between a low of 25659.33
and high of 25981.51, the 30-share index ended at a record closing level of 25962.06, up
138.31 points or 0.5%.
Next week promises to be an action-packed one for local equities, with the new government
facing its first litmus test--the Union Budget for 2014-15 (Apr-Mar)--that will be presented
by Finance Minister Arun Jaitley on Thursday. Railway-related shares will be closely watched
as well, as the government will present the Railway Budget on Tuesday. Talk of a cut in
import duty on gold to 6% from 10% currently in the Budget is likely to push jewellery
stocks higher, while public sector banks may rise on hope government will announce capital
infusion.
The week will also see the earnings season kicking off, with information technology major
Infosys reporting results for Apr-Jun on Jul 11. On the same day, the Central Statistics Office
will release Index of Industrial Production data for May. Expectations from the budget are
high, with reforms being expected on almost every front, be it easing of foreign investment
norms in textiles, capital infusion in public sector banks, divestment in public sector entities,
reduction in fuel subsidies, or gold import duty cut.
Overall, the new government faces a tough task between going all-out on reforms front and
managing the tricky trio of inflation, fiscal deficit and economic growth. Indices have risen
over 8% since May 16, when the Bharatiya Janata Party-led National Democratic Alliance
government won the general elections with a strong majority. We expect the National Stock
Exchange's Nifty to test the 8000-mark in the run up to the Budget.
Any major negative surprise that dents the Street's Budget wish-list may see indices
witnessing some downward correction. However, they do not see a steep fall or expect the
indices to top out after the Budget. With the amount of money flowing in, we do not expect
the market run to
halt anytime soon. A slight correction is possible somewhat if some negative surprises are
announced, but the long-term trend remains intact.
Foreign portfolio investors have pumped in $10.3 bln in Indian equities so far this year.
Yesterday, the Nifty ended at a record high of 7751.60, up 36.80 points or 0.5% from close
Thursday. Intraday, it touched a lifetime high of 7758.00 and a low of 7661.30. The S&P
BSE Sensex came close to touching a lifetime high, but failed to do so. It had touched a
lifetime high of 25999.08 in the previous session. After moving between a low of 25659.33
and high of 25981.51, the 30-share index ended at a record closing level of 25962.06, up
138.31 points or 0.5%.
